Limited Brands in line with Zacks - Analyst Blog

Limited Brands Inc. (LTD) recently posted second-quarter 2010 results. The quarterly earnings of 36 cents a share remained in line with the Zacks Consensus Estimate, but rose nearly two fold from 19 cents delivered in the prior-year quarter riding on improving sales environment.

Limited Brands, the owner of the Victoria's Secret and Bath & Body Works chains delivered quarterly earnings (including one-time items) that more than doubled to 54 cents a share from 23 cents earned in the year-ago quarter.

The second quarter results have made the Columbus, Ohio, based company, Limited Brands more optimistic. Consequently, management forecasted fiscal year 2010 earnings between $1.68 and $1.83 per share up from $1.60 and $1.80 previously anticipated. The company now expects third-quarter 2010 earnings in the range of 3 cents to 8 cents a share.

The current Zacks Consensus Estimates for the third quarter and fiscal 2010 are 6 cents and $1.80 per share.

Limited Brands, a specialty retailer of women’s intimate and other apparel, beauty and personal care products, posted net sales of $2,242.5 million that soared 8.5% from the prior-year quarter, and outdid the Zacks Consensus Revenue Estimate of $2,226 million. The consumers, who cut back their discretionary spending during the recession, are now gradually opening up their wallets.

Comparable-store sales for the quarter under review climbed 7% compared with a fall of 9% registered in the year-earlier quarter. Comps rose 5% in May, 6% in June and 12% in July. Limited Brands now expects August comparable-store sales to rise in the mid-to-high single-digit range compared with low single-digit increase forecasted earlier.

Despite a 4.7% increase in cost of goods sold, buying and occupancy, gross profit for the quarter surged 16.4% to $777.5 million, aided by increase in the top line, whereas gross margin expanded 240 basis points to 34.7%. Adjusted operating income surged 59.1% to $236.5 million, whereas operating margin expanded 330 basis points to 10.5%.

Limited Brands sells its merchandise through specialty retail stores in the United States and Canada, which are primarily mall-based, and its websites, catalogue and other channels. The company currently operates 2,669 specialty stores.